Reuters: Hot Stocks: UPDATE 1-Raiffeisen shares drop after profit warning

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UPDATE 1-Raiffeisen shares drop after profit warning Feb 1st 2013, 10:23 Fri Feb 1, 2013 5:23am EST * Rise in risk provisions - Hungary, Poland, Ukraine high * Writedowns of 69 mln euros including Ukraine, derivatives * Shares down 5.2 percent (Adds details, background, analyst quotes; updates shares) VIENNA, Feb 1 (Reuters) - Raiffeisen Bank International shares fell more than 5 percent on Friday after the Austrian lender warned on profit because of rising risk provisions and writedowns for eastern Europe. The bank expects to post a 2012 net profit of over 700 million euros ($950 million) euros, it said after markets closed on Thursday, implying a larger-than-expected loss of over 100 million euros for the fourth quarter. Full-year pretax profit should be just over 1 billion euros, it said, well below analysts' estimates, which average 1.26 billion according to Thomson Reuters StarMine. The bank said it would still pay a dividend for 2012. Raiffeisen, one of the biggest lenders in central and eastern Europe, said risk provisions would jump to above 350 million euros for the fourth quarter, up from 282 million a year earlier and 224 million in the third quarter. It said the highest provisions for the year were for Hungary, which has Europe's highest bank levies, Poland, where construction companies are in trouble after a soccer-related boom, and Ukraine, where it wrote off its remaining goodwill. Shares in Raiffeisen were down 5.2 percent to 31.35 euros by 0956 GMT, the second-worst performers in a flat European banking index. "We conclude that RBI is guiding to a loss of about 117 million euros in Q4," Citi analysts wrote in a note. They said that even excluding one-off charges flagged by the bank, the company's guidance was still below its and consensus estimates. Like the other large Austrian banks, Unicredit's Bank Austria and Erste Group, Raiffeisen has sought growth beyond its borders in the more dynamic but less developed markets of central and eastern Europe. Until now, its diversified strategy, with operations in 16 countries outside Austria, has mostly paid off. The loss will be its first negative quarter since the start of the financial crisis and reflects the impact of the euro zone's problems on its eastern neighbours as well as political turmoil in some of the bank's major markets. Erste said last month it was writing down goodwill by 300 million euros, mainly on its Romanian unit. Raiffeisen said in November it expected bad loans, which already accounted for a tenth of the bank's lending portfolio, to keep rising into this year. A spokesman said on Friday there were signs of economic improvement across the bank's portfolio and of a reversal of a negative trend in net interest margins. Raiffeisen also said on Thursday it would have a total of 69 million euros' worth of writedowns in the fourth quarter: 29 million for its Ukrainian unit, 10 million for other assets and 30 million for a derivatives position. It said general administrative costs for the year should be steady, excluding costs for the integration of Polbank in Poland, which it bought from Greece's Eurobank last year and where it now plans to cut 470 jobs. ($1 = 0.7367 euro) (Reporting by Georgina Prodhan and Angelika Gruber; Editing by Dan Lalor and Mark Potter) Link this Share this Digg this Email Reprints

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